2016 (10) TMI 1015 - HC - VAT and Sales Tax

Imposition of penalty u/s 48 (5) of the Act - the goods had been purchased from a dealer in Kanpur and had been despatched for sale to a dealer situate at Jaunpur. It was further sought to be explained that since the Jaunpur dealer did not accept the goods, they were, subsequent to their release, sold to another dealer on 18 July 2011 - discrepancy in the weight of goods - whether the circumstances which weighed with and were relied upon by the assessing authority would justify the imposition of penalty under Section 48 (5) of the Act? - Held that - neither the assessing authority nor for that matter the Tribunal has entered any finding as to whether the goods which were seized were actually accounted for in the books of accounts of the dealer or not. The assessing authority, as noted above, primarily rested his order on the various discrepancies which according to him came to light from the explanation put forth by the dealer and the statement of the driver who was accompanying the vehicle. In the opinion of this Court, these discrepancies would not of their own and standing alone satisfy the enquiry which the authority is liable to undertake in order to sustain the levy of penalty under Section 48 (5) of the 2008 Act - this Court is of the considered view that the matter would merit a remand for fresh consideration by the assessing authority - revision allowed by way of remand.

Summary

Issues:
Imposition of penalty for infraction of Section 48 (5) of the U.P. VAT Act 2008 based on discrepancies in the transportation of consignments of iron and steel.

Analysis:
The judgment involves five revisions arising from penalty proceedings against the revisionist for the transportation of goods. The revisionist was put to notice under Section 48 of the U.P. VAT Act 2008 for alleged infractions. The assessing authority, supported by the Tribunal, imposed a penalty of 40% of the tax payable on the value of the goods based on discrepancies in the explanations provided and accompanying documents.

The main issue at hand is whether the circumstances relied upon by the assessing authority justified the penalty under Section 48 (5) of the Act. This section allows for penalties if goods are omitted from accounts, not traced to a bona fide dealer, or undervalued with intent to evade tax. The authority must be "satisfied" of these infractions and the intent to evade tax for penalty imposition. The judgment emphasizes that mere discrepancies are not enough; the authority must establish the deliberate intent to evade tax.

The Court found that neither the assessing authority nor the Tribunal determined if the seized goods were properly accounted for, traceable to a bona fide dealer, or if their value was suppressed with intent to evade tax. The discrepancies alone were deemed insufficient to justify the penalty under Section 48 (5). As a result, the Court remanded the matter for fresh consideration by the assessing authority, emphasizing the need to evaluate if the goods were dutifully accounted for and if there was an intent to evade tax.

Therefore, the revisions were allowed, setting aside previous orders, and remanding the matter to the assessing authority for a fresh decision in line with the Court's observations.